Will COVID-19 Erase Black Workers' Labor Market Gains?


  • Julie Hotchkiss
    Federal Reserve Bank of Atlanta

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Summary:

Black workers experience what is known as a "high-beta" effect across the business cycle. They are hit harder during recessions but benefit more from the momentum of a recovery, especially during particularly strong economic periods. For three years preceding the COVID-19 recession, the United States was enjoying what has been referred to as a "hot" economy. During this time, Black workers regained some of the ground lost in labor market outcomes during the Great Recession, relative to white workers. The sudden onset of the COVID-19 recession reversed that progress. Even though the Congressional Budget Office projects the U.S. economy to regain its hot status as early as 2024, the negative impact of the COVID-19 recession could linger.

Key findings:

  • The unemployment rate gap between white and Black workers declined during the hot economy of 2017–19.
  • The positive influence of the hot economy is expected to continue into the COVID-19 recession.
  • The negative influence of the COVID-19 recession is expected to be felt by Black workers even once it concludes.

Center for Human Capital Studies

JEL classification: E24, E60, J64

Key words: labor market disparities, labor market gaps, unemployment, racism, hysteresis

https://doi.org/10.29338/ph2021-02

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